July 26, 2024

Nigeria’s major Dangote oil refinery is reselling cargoes of U.S. and Nigerian crude, four trade sources familiar with the matter said on Friday.

Three of the sources said the reoffer was linked to technical problems at the refinery.

A Dangote executive, asked about the offers and talk in the market that the refinery is having operational issues affecting the crude distillation unit, said the CDU is in operation.

The refinery started production in January and will be the largest in Africa and Europe when it reaches full capacity. It could upend what has been a highly lucrative Europe-to-Africa fuel trade and transform Nigeria into an exporter of fuels.

Cargoes of Nigerian Escravos and Forcados crude were among the grades being offered, as well as U.S. WTI Midland crude, the sources said. The plant has been importing several crude cargoes a month, traders have said.

Such resales by refineries are quite rare but not unknown, traders said. Crude prices added to an earlier decline after the news on Friday. Brent crude fell as much as 2.5% towards $80 a barrel, and had recovered to above $81 by 1700 GMT.

The 650,000 barrel-per-day refinery was built at a cost of $20 billion by Africa’s richest man Aliko Dangote.

Dangote aims to reverse Nigeria’s reliance on imports for fuel which have continued even though the country is Africa’s biggest oil producer.

REUTERS